Centers for Medicare & Medicaid Services (CMS): Advanced Alternative Payment Model (APM)

An advanced alternative payment model (APM) is a type of payment system that is used in the healthcare industry to incentivize healthcare providers to deliver high-quality, cost-effective care. These models are designed to encourage providers to move away from the traditional fee-for-service model, in which they are paid for each individual service they provide, and instead focus on delivering coordinated, comprehensive care to patients. APMs may involve shared savings arrangements, in which providers receive a portion of any cost savings that are achieved, or they may involve risk-sharing arrangements, in which providers are financially responsible for any cost overruns. Advanced APMs are a key component of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), which aims to reform the payment system for Medicare providers. Advanced APMs are typically designed for use in primary care and specialty care practices, as well as in hospitals and other healthcare facilities.